40 Global Gaming Business FEBRUARY 2019D
ave Waddell is a veteran gaming attorney in Michigan and a partner
in Regulatory Management Counselors, based in East Lansing.
Waddell gives some behind-the-scenes observations about the passage of a
bill legalizing iGaming by the legislature and the veto by outgoing Gover-
nor Rick Snyder, as well as the possible future of a revived iGaming bill.GGB:Michigan has been
considering iGaming for a few
years, but the legislature finally
pulled the trigger. Did that
surprise you?
Waddell:It was not a huge surprise
that a legislative compromise came to-
gether, as support had been slowly grow-
ing over time. The Michigan Lottery had
moved pretty aggressively in adding on-
line games with success, which elimi-
nated some of the fear of the concept within the state. Additionally, there
were multiple interests involved, each of which wanted different types of
gaming legislation to pass (ADW for horse racing, charity gaming law
amendments, and fantasy sports operators).
During the course of discussion on all these bills, it became clear that
to get the needed votes, all the bills would need to be addressed at the
same time. The “lame duck” legislative session (after the election) pro-
vided a good window to seek to finally get these bills passed. Thus, it was
not a big surprise that the legislature acted during this year-end period to
seek to address the concerns of all these various members of the gaming
industry in Michigan. To us, the bigger surprise was that outgoing Gover-
nor Snyder vetoed the legislation in an apparent effort to protect the lot-
tery from competition online.It also appears that the proposed regulations are very favor-
able to companies that will offer the wager. The tax rate is
even lower than in the physical casinos. How would that
have impacted the companies and tribes that would have
been eligible to offer iGaming in Michigan?
The lawmakers in Michigan did a very good job with regard to learning
the dynamics involved with sports wagering and online gaming. They re-
alized that to be competitive, a realistic tax rate needed to be utilized for
these activities. The bill that passed both houses but was vetoed limited
the eligible companies that can seek a license to offer iGaming to the three
Detroit casinos and any Indian tribes located in Michigan that currently
conduct Class III gaming. It also built in a 15-month period for the
Michigan Gaming Control Board to develop and promulgate regulations
governing the iGaming.
Under the bill, the operators would all have been able to offer iGam-
ing throughout the entire state. Thus, there would have been a healthy
level of competition between operators to try to establish brand-name
recognition either by partnering with companies that have well-estab-
lished brand recognition or by using their own brand.
We would think that companies offering iGaming in Michigan would
likely be looking to partner with those that can help them win over thelargest customer base, and the tax rate was
set at a rational level to allow for this to be
done in a way that would lead to success
to both the operators and their partners.
All of the operators were also hopeful that
through cross marketing, they would have
been able to generate additional casino
visits to their brick-and-mortar casinos.Do you believe Michigan will add
mobile and online sports betting
to its gaming options if the bill
is considered again?
Despite the outgoing governor’s veto, there seems to be a widespread con-
sensus that mobile and online sports wagering will be coming to Michi-
gan. The iGaming bill that passed in Michigan but was vetoed provided,
in part: “The division may permit internet gaming operators licensed by
the division to accept internet wagers under this act on any amateur or
professional sporting event or contest.”
In addition to the iGaming bill, the Michigan legislature passed an-
other bill (also vetoed by the governor) that amended the Michigan Gam-
ing Control Act stating that the 8 percent wagering tax imposed on
iGaming will also be imposed on sports betting (presumably either at the
casino or online). State Rep. Brandt Iden, who previously sponsored a bill
that expressly authorized sports wagering, has gone on record saying he
will reintroduce the bill in the next legislative session to provide a statutory
framework for the sports wagering activity.What does the potential future legalization of iGaming in
Michigan mean for the legalization of iGaming in more
states?
If the legislature takes action to re-introduce and pass the legislation that
the governor just vetoed, Michigan could become a model state for other
states to emulate when it comes to iGaming. With a new governor just
taking office, and with a new crop of legislators also coming into office, it
likely will take several months for the bills to be reintroduced and passed.
In developing the bills that were just vetoed, Michigan took a realistic
approach in setting its tax rate to allow operators to be successful while
generating additional revenue for state and local interests. Based on prior
history, the Michigan regulators would be likely to make sure they use best
practices when it comes to developing a practical, yet robust regulatory en-
vironment. Once other states see that iGaming can be introduced in a way
that enhances the gaming experience and provides additional streams of
revenue, it is easy to envision that other states will want to follow suit.
Thus, we believe that the legalization of iGaming in Michigan would
likely lead to further expansion into other states.Michigan Miss
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